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Abstract from

Competition, Regulation and the California Electricity Market

Ann Wardrop is Lecturer in Law and Legal Studies at La Trobe University, Melbourne.

The provision of essential services has been regarded traditionally as the preserve of natural monopolies and therefore justifiably the object of heavy government regulation. During the past 20 years, neo-liberal theories about competition have been successfully utilised to re-assert the market as the dominant regulatory technology in conventional areas such as the banking and finance industry. This success provided the impetus for the extension of these theories to the regulation of essential services. California 'deregulated' its electricity market by dismantling the monopolies of its investor-owned utilities and introducing competition to the supply of electricity. It subsequently endured large increases in prices, interruption of supply and the bankruptcy and financial distress, respectively, of two of its largest utilities.

This article traces the story of the California electricity crisis in order to explore the ways the debate about the limits of the market as a regulatory device played out in that context. It argues that the experience in California shows that the application of market rhetoric to competition within essential services masks the true nature of the regulatory regimes which are constructed around their provision. It concludes that what occurred in California was a re-ordering of regulatory technologies, rather than 'deregulation' as envisaged by neo-liberal theory, or the appearance of a new 'regulatory state'.

(2002) 20 No 1 Law in Context 141
Keywords: Competition; Privatisation

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